Hammurabi cancelled the debts and everyone forgot
The king of Babylon wiped out agricultural debts not once but repeatedly — and the practice was so normal it barely made the history books.
Around 1760 BCE, Hammurabi issued a royal decree resetting unpaid agrarian debts across Babylon. He did it again. And again. Historians have found records of at least four such cancellations during his reign alone.
The logic was not charity. When a bad harvest forced peasants to borrow at ruinous rates, they fell into debt peonage: land sold, children pledged, freedom forfeited. A king who let that run unchecked destroyed his own army, his tax base, and the farmers who fed his cities. Periodic forgiveness was state maintenance.
Anthropologist David Graeber argues in Debt: The First 5,000 Years that debt cancellation was actually the norm across ancient Mesopotamia, not the exception. The Akkadian word andurārum — a return to the original order — appeared in decrees across several dynasties. What Graeber finds remarkable is not that they canceled debts but that we came to see debt as something sacred and inviolable when, for most of recorded history, rulers understood it as a tool that periodically had to be reset.
The idea that a debt, once made, must always be honored is surprisingly young. The idea that it needn't be is older than coined money.